Tribes Use Sovereignty to Skirt Legal Judgments

by Bob Eighmie, Associated Press
February 11, 2002

U.S. courts have no jurisdiction over actions of Indian tribes

Tribal law helped ousted Tampa Seminole Tribal Chairman James Billie avoid a sexual harassment trial. The case was thrown out of federal court.

To Tim Schwartz, it was a clear case of breach of contract.

He had a $2.2 million deal to build 28 houses for Grand Traverse Band of Ottawa and Chippewa Indians. But two years after signing the agreement, with only 19 houses built, the tribe closed down the project and dissolved its housing authority, which had contracted with Schwartz.

Schwartz, whose company Genesis Construction had collected only $1.5 million in payment, sued to recover $729,000 in losses.

That’s when tribal leaders pulled their trump card — sovereign immunity. As a sovereign nation, the tribe argued that it couldn’t be sued in federal or state court unless it agrees to such a suit or Congress authorizes it.

So far, neither has happened.

And even if the tribe is sued and loses in tribal court, it can’t be forced to pay the judgment. It is a common dilemma for businesses and individuals who try to sue tribes.

Time and again, tribal leaders have used sovereign immunity to protect themselves from the consequences of their actions. The problem is not confined to Michigan.

When the Oklahoma Kiowa Tribe acquired a small aircraft maintenance company in western Oklahoma last year, it entered into an agreement to pay the former owners $285,000. It never did.

The non-Indian former owners sued. The Kiowas have argued that their sovereign immunity protects them from such lawsuits.

The case is pending, but courts have traditionally ruled in favor of tribes when sovereign immunity is used as a defense.

In many cases, federal and state courts have ruled they simply don’t have jurisdiction to hear cases brought against tribes or their leaders. That was the situation when Christine O’Donnell sued ousted Tampa Seminole Tribal Chairman James Billie in federal court for sexual harrassment.

In May, the 39-year-old O’Donnell filed her suit charging that Billie got her pregnant and then forced her to have an abortion. She claims after the abortion he fired her, paying her off with $100,000 in tribal funds.

The suit didn’t get far. In October, a federal judge kicked it out, claiming the court didn’t have jurisdiction over tribes in this matter. Billie, who has maintained his innocence, didn’t have to answer the charges in court.

Tim Schwartz’s breach of contract lawsuit against the Grand Traverse tribe has survived in federal court longer than most. He has argued that because his contract was with the tribe-owned Grand Traverse Band Housing Authority, which at the time also operated under a similar name as a registered Michigan nonprofit corporation, the agreement is subject to state and federal rules.

In addition, more than 80 percent of the money for the houses was being provided by the federal Housing and Urban Development agency, which Schwartz believes should afford him extra protection.

The tribe’s lawyer, Bill Rastetter, says the tribe believes it is fully protected from the suit by its sovereignty, but is exploring a settlement with the contractor. Schwartz says that despite talk of a settlement, the tribe has insisted that no tribal money will be spent to pay him.

“I think it is their position that if they get the money from HUD or someone else that I will get paid,” Schwartz said. “But I don’t see why I should have to wait for someone else to pay me when my contract is with the tribe. I was held to the contract and kept my end of the bargain. The tribe should do the same.”

HUD officials have refused to comment on the case while it is under litigation. But Schwartz said HUD officials indicated their agency has no intention of getting involved in the dispute.

For Schwartz, the situation has proven costly. He is being sued by one of his suppliers, who is asking for $170,000. And he already has more than $40,000 in attorney fees.

“People tell me I am crazy to sue the tribe because I can’t win,” Schwartz said.

“But I can’t accept the fact that they have the power not to honor a valid contract. Not in America.”